Blogs & Comment

Tougher environment for tax cheaters?

Yesterday I was in the budget lock-up at the Conference Centre in Ottawa, combing through Budget 2010 documents for measures that could affect the personal finances of Canadians. There werent any big, sweeping initiatives but there were plenty of smaller, targeted ones. My post on them appears on the website.
One of the more intriguing aspectsof the budget, in my opinion, was the references to dealing with aggressive tax-planning schemes. The budget document identifies at leasthalf-a-dozen loopholes the government wants to close.* Thats no surprise given the need to bring the fiscal deficit under control; closing loopholes is one way to generate tax revenues without causing too much protest.
The budget seemed to be signalling a tougher environment for Canadians who take tax avoidance and evasion too far. In addition to targeting several loopholes, the budget sets out two proposals for strengthening the governments capacity to deal with abuse of the tax system:
initiate public consultations on proposals to require reporting of certain tax avoidance transactions
ensure Criminal Code provisions relating to money laundering and terrorist financing be applied to cases of tax evasion prosecuted under Canadas tax laws.
*Footnote: The two loopholes I examined had rather substantial revenue implications. The claiming of cosmetic procedures (such as liposuction, hair replacement, botox injections and teeth whitening) under the medical expense tax credit would have drained $200 million from government coffers over the next 5 years. Another $1.6 billion over the next 5 years would have been lost to a scheme involving employee stock option plans.